The city of Boulder is considering what its energy future will look like. The goal it to acquire "clean, local and reliable" energy in the future, and one voter-approved option is to start a municipal utility. For more information on the history of this decision, click here.

City officials field questions in conference call

An open house on municipalization strategies takes place from 6:30 to 8:30 p.m. Wednesday at the West Senior Center, 909 Arapahoe Ave.

The Boulder City Council will hold a public hearing and vote on a municipalization strategy at its April 16 meeting.

To read the full report on municipalization strategies and alternatives, go to boulderenergyfuture.com. Video of the Feb. 26 study session with the City Council is also available there, and audio of the Tuesday conference call will be posted soon.

Whether Boulder would be able to keep rates competitive with other utilities and how the city would provide reliable energy when drawing power from multiple sources were among the questions that members of the business community raised in a conference call Tuesday with city officials.

City officials say their analysis shows a potential municipal utility would be able to offer rates similar to or lower than Xcel Energy's while providing similar reliability and significant reductions in greenhouse gas emissions.

Tuesday's conference call was aimed mostly at the concerns of the business community. An open house to address more general concerns is scheduled for Wednesday.

Advertisement

The City Council is scheduled to vote April 16 whether to move forward with the creation of a municipal utility. That vote does not represent the final decision. Rather, the city will proceed with additional due diligence, including submitting its analysis to an independent third-party review, and preparing to pursue condemnation of Xcel's distribution system.

The presenters on the conference call were Heather Bailey, Boulder's executive director of energy strategy and electric utility development; PFM Group Managing Director Michael Berwanger, who worked on the financial models; Schneider Electric Smart City Manager Bob Lachenmayer, who discussed reliability issues; and Jeff Tarbert, American Public Power Association senior vice president.

There were at least 30 participants in the call.

Berwanger said the financial modeling examined a wide range of factors, including uncertainty in the bond markets and the interest rates Boulder might pay. Even at the higher end of the range, Boulder could still provide competitive rates, he said.

Investors probably would give more scrutiny to bonds issued by Boulder because it would be a new public power utility, but the city's AAA bond rating would help it secure better rates, Berwanger said.

Tarbert said public power companies can be closely attuned to their customers' needs because they don't have to make a profit for shareholders.

"The basic tenet of public power is that it's open, and businesses and other interested parties have a maximum say in how it's run," he said.

Perhaps reflecting some unease with the city's plans, one of the first questions in the call was why, if the city is so confident it can provide better service, it doesn't allow customers to choose between service from Xcel Energy and service from a municipal utility.

Bailey said Colorado's regulations do not allow electric utilities to compete directly.

That caller asked what would happen if costs turned out to be more than anticipated and the municipal utility couldn't provide competitive rates. Would the municipal utility dissolve itself?

The answer was no. The city charter requires that a municipal utility be able to provide rates that are the same or lower than Xcel's at the outset, but the City Council would have the authority to raise rates moving forward.

City officials said having that ability is key to reassuring bondholders that a Boulder municipal utility is a safe investment.

However, Boulder spokeswoman Sarah Huntley said that question is why the city has modeled rates over the next 20 years.

"We understand that people wanted to see beyond day one acquisition rates," she said.

Another caller asked how the city would guarantee reliable power when it intends to get its energy from a variety of providers through power-purchase agreements and how it would prevent damage to equipment from intermittent power coming on and off the system.

Boulder Regional Sustainability Coordinator Jonathan Koehn said the city would have contracts with natural gas providers to "firm" the power supply for intermittent sources like wind and solar, and pay tariffs like all power companies to "balance" the power coming across transmission lines.

The city also would have reserve power available to customers equivalent to the amount of power it gets from its largest provider. If local, on-site generation becomes a larger share of Boulder's power supply, there are ways to balance that power locally, including creating microgrids, Koehn said after the conference call in response to a follow-up question.

Koehn said Boulder would not buy power on the "spot market" except in an emergency.

Another caller asked what would happen to the lease he has with Xcel Energy for a solar array.

Deputy City Attorney Kathy Haddock said the city is still in the process of examining those contracts, but the city intends to make every lease holder and Xcel Energy whole in the event the city forms a municipal utility.

There also were detailed questions about how the rate structure for larger industrial and commercial customers would compare to Xcel's. Bailey said the city would develop a rate structure in the next phase if the City Council votes to move forward.

However, rates among all customer classes must be "fair and equitable," she said, and the formulas for developing the rates would be public.

Ballot language:
In November, Boulder voters narrowly approved two ballot issues related to starting a municipal utility: 2B and 2C. You can read the full text of the ballot language on the city's website.

Issue 2B asked voters to increase the existing utility occupation tax by up to $1.9 million a year. The money from the tax, which will be collected from customers by Xcel Energy, will be used by the city to cover the costs of moving forward with forming a municipal utility, such as more studies and legal fees.

Issue 2C asked voters for permission to actually form a municipal utility. The language allows the city to sell the necessary bonds to take over the current system from Xcel, but it states that the city may only move forward with forming a municipal utility if it can start the utility with rates that are the same or cheaper than Xcel's.

Helpful Links:City of Boulder: This is where the city is aggregating all of its documents, meeting information and updates on Boulder s energy future: bouldercolorado.gov/energyfuture

RenewablesYes: This website is run by the group of volunteers that lobbied local voters to pass a utility occupation tax in November to replace the expiring franchise fee from Xcel Energy. Now, the group is advocating for the city to secure a cleaner, more local energy supply. renewablesyes.org

Xcel Energy: Xcel is the largest utility in Colorado, and it currently provides electricity to Boulder. The city s 20-year franchise agreement with Xcel expired at the end of 2010. xcelenergy.com

Boulder Smart Energy Coalition: A citizen group that supports the city's general energy goals but has concerns about the risks involved with starting a municipal utility. bouldersec.com

SmartGridCity: Xcel Energy has installed a smart grid in Boulder. This web site provides more information on that initiative. smartgridcity.xcelenergy.com

Colorado Association of Municipal Utilities: This Colorado Springs-based group represents the state s 29 municipal utilities, which include utilities based in Lyons and Longmont. coloradopublicpower.org